If you're paying off more than one debt, you'll quickly run into two competing strategies: the avalanche method, which targets the highest interest rate first, and the snowball method, which targets the smallest balance first. The internet treats this as a moral debate. It isn't.
Both methods work. They both eliminate every debt eventually. The interesting question is which one your brain will keep showing up for in month seven, when novelty has worn off.
How each method actually works
You list every debt, you keep paying the minimum on each, and you put every spare euro into one specific debt. The methods differ only in which one.
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| Method | Order of attack | Optimises for |
|---|---|---|
| Avalanche | Highest interest rate first | Total interest paid (mathematically optimal) |
| Snowball | Smallest balance first | Number of cleared accounts (psychologically optimal) |
The math of the avalanche
Mathematically, avalanche always wins. On a typical mix of credit-card and consumer-loan debt, choosing avalanche over snowball saves between 3% and 8% of total interest over the full payoff period. That's real money — typically a few hundred to a few thousand euros depending on balances.
The psychology of the snowball
The 2012 study by Gal & McShane (Harvard Business Review) and several follow-ups have replicated a counter-intuitive result: people who use the snowball method are more likely to actually finish paying off their debts. The early visible wins — an account closed in three months instead of fourteen — keep them engaged.
The best payoff method is the one you'll still be doing in nine months.
How to pick yours in ten minutes
Use this short test. Read both questions, write down the honest answer.
- In the past three years, how often have you set a long financial goal and stuck with it past month four?
- How big is the gap between your highest and second-highest interest rate? More than five percentage points, or less?
If your answer to (1) is “rarely” or “never”, the snowball will probably get you to the finish line. If your answer to (2) is “more than five points”, the avalanche saves so much money that the math wins even for streaky savers.
The hybrid most people end up using
Many readers settle on a sequence we call the hybrid: clear the smallest debt first (one quick win), then switch to avalanche. You get the early dopamine of the snowball, then the long-term efficiency of the avalanche. It's not theoretically optimal, but it's a sustainable compromise.
What to do this week
- List every debt: balance, minimum payment, interest rate.
- Pick a method using the test above.
- Set up the minimum payments as automatic transfers so you cannot accidentally miss one.
- Send any extra to the targeted debt manually each month — the manual step is part of the ritual that keeps you connected to the goal.
The choice between avalanche and snowball matters less than the choice to start. A bad plan executed for two years beats a perfect plan abandoned in May.